Analyst Joanna Gajuk from Bank of America Securities maintained a Sell rating on AdaptHealth (AHCO – Research Report) and keeping the price target at $7.00.
Joanna Gajuk’s rating is based on a cautious outlook toward AdaptHealth’s long-term growth prospects despite the company’s own optimistic view. Although AdaptHealth anticipates acceleration to high single-digit organic growth by 2025, the analyst maintains an Underperform rating, highlighting the uncertainty of these growth predictions. The current guidance suggests only a modest 3% revenue growth in 2024, and while there are positive factors that could contribute to growth in the following year, such as the expiration of the 75-25 rule and potential gains in Diabetes and Sleep segments, these are not enough to mitigate the concerns surrounding the company’s future performance. Additionally, AdaptHealth’s reliance on future contracts that are not yet included in the guidance adds another layer of uncertainty.
Furthermore, Gajuk points to specific operational challenges that could impact AdaptHealth’s near-term financials. The unchanged full-year guidance despite a better-than-expected Q1 is partly due to anticipated cost headwinds in the second quarter, including inefficiencies from a system outage and potential shipping delays for sleep supplies. Although the company does not foresee GLP1 drugs significantly affecting growth and expects the diabetes segment to stabilize, these views are not sufficient to alter the Sell rating. The report reflects a conservative stance, considering both the risks associated with the incoming CEO’s transition and the execution risks as the company tries to navigate through a challenging period for its sleep and diabetes businesses.
AHCO’s price has also changed moderately for the past six months – from $8.300 to $9.840, which is a 18.55% increase.
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
AdaptHealth (AHCO) Company Description:
AdaptHealth Corp. provides medical products for both rental and sale. It focuses on respiratory and/or mobility equipment, including CPAP sleep equipment, oxygen equipment, wheelchairs, walkers, and hospital beds. The company was founded in 2012 and is headquartered in Plymouth Meeting, PA.
